>> t: you're watching "nightly business report" foronday, february 1 this is "night business report" wi susie gharib and tohudson. "nightly business rert" is madpossible by:

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>> sie: good evening everyone. help is on theay. that's the urgenmessage from toyota today to millns of car owners dealing with fects in gas pedals. >> tom: susie, t recall has been a big crisis for yota. nothe giant automaker is shipng new parts to dealers and says it will wor24/7 to make repairs. >> susie: there are about 5 million vehicles affected. the remedy involves tting a metal bar in the acceleror to keep the pedal from stking. is this really gng to fix the problem? that'she first question i asked toyota'sresident for u.s. sales. >> we are veryvery confident th we have all the issues taken care of. >> susiejim, are you sure there isn't somether glitch going on because some people have bee questioning wheer the pedal oblem is really a mputer ectronics probl. >>t's not. we kw what happened to ese pedals. we have tested our electronics on our vehicle we have do everything tha we can to t to tck the

systemo fail. and it doesn't becse there are many fail-saf that are built into thoseystems so it can't >> susie: u said your dealers will be wking around the clock toake these repas. how quickly doou fix.5 million hicles. >> i can't te you the answers to tha the dealers are just receiving on tuesday and wednesday. the training wilbe complete. we'lbegin to take care of customer cars at the end of is week. once that takes plac, we'll have a good undetanding of how longit tas to do a sile car. >>usie: but en after you do all of these repai the's still a lot of fear and anxiety out tre. many toyota owns are wonderg, will it be safe to drive these cars? is it safe? >> put it this way. i drive a tota as you wou image. my wife is in a toyota. both my cldren are in toe out as. my parents and my friends and family, everyone i know a driving toyot. i wouldn'tut those peopl toyo if i didn'tthink they were safe. >> toyota has beenevered for

quality and reliabily. wh do you need to do to restore trust? >> sure,we made a mtake here. we are very sorry that we've caused conce to our customs and that we've used them inconvenience. because it's not what we' all about. we are redoubling our efforts on the quality side. we will geto the ttom of all these issuesut right now wh's most portant is to take ce of these customers. >> susie: what are yougoing to do? >> we had a huge reservoir of brand equity d trust built up in the bran with our stomers. obviously this dins some of that reservoir. so i think our loyal customers are going to give us second chance. >> susie: over the weekend toyota'seo made an apology. you've been running full page adin newspapers. is that enou? do you need todo more? >> i think we need to do more by action. and not just by what 're telling folk. they're not going to belve us untilhey come in. we take care of their vehies and thr vehicles are fine. we are confident that this fix

isoing to te care of that. >> susie: the word on toyota right now is that it let quality slip. it cut corners and it's pushed to be the number one auto maker. what do you say to pple who are.... >> i don think we cut corners. i think as we glue e line beca much more complex i thk the complexity added to the difficultyf making su that quali was absolutely perfect. >> susie: as y look at this whole crisis, are you going to be makg changes? maybe roll out fewer vehies so you can be more quaty consciou you ow, maybe go back and rechk the whole coverer process in. >> there is going be plenty of time for us to go back and look at th process and see how this happened. but ght we have to take care of our custors. >>usie: ford and g.m. are movi in on your customers offeng incentives consumer reports has spended toyota from itsecommended list how e you going to convince people to ce back from t toyota. >> vehicles at have not been

stopped sale, th volum are quite good i don't think we're going to see this huge fl offhe cliff in our volumes. are w going to ve an impact is month? i don't know what that is. we're closing the numbers tonight. >> susie: from crisis managemeoint of view, if you had a chance t do a do-over whatould you dodifferently? >> i know some have been crical that we have remained silent for theast ten ds. quite frkly, our emphasis has been on finding o what the problem is, putting together the solions and now implementi that sotion to our custome. terms of the currentrecall the pedal from the time that we firssaw the issues in th initialal rorts unl the time that we're taking actn with the consums is about 90 day i don'think we would have done anythingifferently. i think that's been handled veryvery well. >> susie: jim, thank you so much for your te. good luck with all of this. >> thank you. appreciate it. >> tom: the rell has created plenty of unrtainty for nsumers and toyota dealers. 21 of autonation's07 outlets

sell toyotas, mang it the brand's single lgest seller in the u.s. his ma dealers saw changes in car-buying traffic overhe ekend. >> there is a shif inales traffic to chevrole, honda, and fordhat we clearlyee. now once the toyota factoes start agai once we repair the invtory in lat february going into mar, incentives will come from toyota. they will fight back. i predict in two to three months the story will have settled down >>eporter: you're a big part of tota sales. what do yothink that slls for january and february sales when it comes to toyota north america? >> they'll be wn. the's no avoiding tt. yocan't shut down factori and free 50% of the inntory and not have it

impactales. it aolutely will. and i think their focus is right. take ce of exisng customers first. and by march, you'll begin to see a recovy of the sales. toyota will be, is already being very aggressive with incentives to helps through thisisruptive period. >>om: do you anticipateny new dealer-focud centives? or buyerncentives.... >> expect both. buyer incenves, dealer incentives, financing incentives. they need they know do everytng possible to get through this period. both for existing customers, first and foremost. but also to get the busiss movinggain. it's not gng toappen by itself. they have to take measures and theyill. >> tom: what are you looking at in terms of e impact on the toyota dealers, the 1 toyota dealers that areart of the autonation mily. >> in the nr term there will be a fincial impact. it's unoidable.

actual in the long term, i'm not as conrned. there's several million vehicles that haveo be modified for these recalls. we have the technical expertise to do it. we'll work 24/7 to get it all done. >> tom: wh kind of impact es this he on autonation inco when betterthan 50% comes from the impt business including toyota? >> well, it's 30 to 40 percent. yota isignificant piece of that. 50% of the company's profitability. it's meaningful. t the vast majoty of our shareholde are with us for thlong term. they know we'll skillfully handle this challen and get through it. >> tom: any materialmpact do you think that it's gog to have on quartly figures? >> well, you know, again i have to be very clear. the tuation is so fluid, unprecedented and unpredictable, i would be crazy to try to put a number on it. however to say it won't have

an impact is total nonsense. i wi have an impt both on sales d profitabity dung the quarr. >>om: how does thi impact autonation's forecas onor even youforecast for auto sales for010? wi this impact the number of cars being sold will it just shift where the car buyers will ? >> there will beo impact on the total numb of vicles sold in e u.s. this year. we're forecting 11.5 million uns for the industry. if you take out the non-returning cash for clunkers from last yea it was under million. it's a gd 15% improvement in sales for the industry this year. and that's because credit is gradually recovering. we've gottandstill a yea ago. now it's gradually recoveri. fleets are old. gh mileage. they have to be updated. you put it altogether. it will be 11.5. agreed 11.5 is still deprsion-level sales. we'll get back tohe good old recessn in 2011.

i'llever be ppy to have recession-level sale in 2011 and t our stride 2011 going into 2012. >> tom: the toyota servic depps are among those pledging to extend their houras they deal with this gas pedal rell. and earlier one involving floor mats. you n watch that part of my interview wi c.e.o. mike jackson on our website, pbs.ornbr. here's a lk at tonight's "n.b.r. newswheel". fowall street, the new month began th some buying. the dow ending theay with a triple-digit gailed by basic materialnd energy stocks. the dow gained 118 pois, the nasdaq rose almost 24, and t s&p 500 added 15 americans weretill holding tight their purse strings over the holids. the commerce departmensays ending ticked up only slight in december, up a less tn expected 0.02%. and the latest rding on real estate also disappointed tay, consuction spending fell twice as much as expecte down 1.2% in december. economis say today's reading reflects continued weaknesin the commercial real estate market.

>> susie: anotr big story today touches virtually evy aspect of life in america: the federal budg. the president is proposingo spend $3.8 trillion in the coming year. the top priority, jobs president oba is asking congress f $100 billion to boost employment. spending on education and dense will also increase. t the rest of the budget wil be frozen,hat is except for spending osocial security, dicare, medicaid, and veteran's programs. what's out? the budget drops big program caed cap and trade. that would havrequired compies to control greenhouse gas emissions. republicans say the presiden isn't doing enough to duce a deficit estimad at $1.6 trillion this ye. t the president says once jo me back it will be time to reduce theeficit. >> the botm line is this: simply cannot continue to spend as if deficits d't have consequences, as if wast

doesn't matteras if the hard- earned tax dlars of the american peoe can be treated like monoly money, as if we can ignore this chalnge for anher generation. we can't. >> susie: $708 billionthat's the magic number for defen spending. the president seeking that record amount to help pafor the conflicts in iraq d afghanistan. military budget observers ve been waitingor deep cuts in weapons spending, but th day has yet to come. >> reporter: the presint requested nearly $30billion to buy weapons d support services for tharmed forces, a slight increase over last year. defense analyst todd harrisois skeptical that can continu >> d.o.d. was not part of spending freeze is time around, t i think it's se to say that the defic is going to put downrd pressure on everytng in the coming years and defense will be no ception. >> reporter: the pentan will spend more for unmanneaerial

vehicl, helicopters, and cyber security gear. thpentagon funded e joint rike fighter to the tune of $11 llion a year, despite problems with st overruns and delays. but defense cretary robert gates took an unusual ep and withheld $614 million fromhe contractor lockheed martin >> one cnot absorb the additional costs thawe have in this proam, and the delays, without people being hd accountable. and if i've set one tone in e department of defense it'shat when things go wrong, peop wi be help accountable.

defensanalyst loren thompson says it's hard to see how defense spenng will be curtailed. it appead that nobodyn coress is going to say no to the defse industry which means the main way we're likely tcome up against a barrier heres if the chinese or some other country stop buying our i.o.u.s. >> reporter: the defense department is working closely with industry leads on its spding priority. brett lambert is the pentagon's director of industri policy. >> there not a commercial market for nuclear submaris. we need to be mindf of at parts of the industrial basere crical to maintain that capability. that's different than comper chips or printed circuit boards. so we need to take a more nuanced apprch to o overall indurial policy view. reporter: he says that's why penton officials have been meeting regularly with instry executives. the gl: worki together to best suppo is the troops. stephanie du nightlyusiness report washington.

>> susie: how ce to kick off thweek with the markets up for a ange. i undersnd that exxon had something too with that. >> tom: it did we saw a lot of green arrows the mostctive board. les get right to it and tak a look at tonight's market focus. it is another peak week fo corporatearnings as investors await e january employment numbers on friday. the pace of rnings is a little ghter but still nearly 100 s 500 rms will report before the

end of theeek. oil giant exn mobil led the way this morni with profits dropping 23% even as renues were higr. both results, thgh, were better than expected like other big oil firms exxon's weakne stems from its u.s. rinery business. the stock reonded positively, helping push up the overall w. x.o.m. was the third bt percentage perform of the dow today. also on the earnings calenr today, "u.s.a. today" publher gannett. the company livered a profit, beating exctations. the race between shrinking les and cutting costs, ganne was able to stay ahead o declining in sal. 5% of s newsroom staff was cut in decembe results also were lped by a big drop in the costf newsprint. shareholders saw decent drop in the stock pce, down 7% on more than three times avage volume. michael kunski of noble financial, who we spoke withn friday, calls it sling on good news. he mayncrease his price target

fr $22 to $24. with the market ending juary in the red, basimaterial stocks were amonthe weakest. but today, buys returned. metal mpanies like alcoa and miner freeport mcmoran sawains of 5% an7% respectively. gold wasack over $1,100 today. dupontumped 3%. u.s. steel wasp 6%. defense contractor lockhee martin may continue bear watching, as stephanie de mentioned. ile the pentagon's budget is not part of the presidens spending freeze, lockheewon't be able to colct right away on $614 mlion in fees because of delaysn the f-35 joint strike fighter ogram. lockheed stock is abt $1 away from a n low on the year. the defense department is withholding the millio thanks toockheed missing progress and peormance benchmarks over the past two years. it'sough not to make a pun when mentioning casino stos. it just too easy.

the grouwas climbing today. las vegas sand wynn resorts, and m.g.m. mirage l saw decent buying on od volume. chinese gaming revenues ar expected to help out fourth quarter results. overall gaming revenue imacau, china is up almost 65% sce july. earnings forhe trio begin in four wks. new worries surfaced today or amazon.com's ability tstay on top of thelectronic book business. more than ree times the normal volume of shares tradehands with the stock dropping re than 5%. between apple's ipad announcement a pressure from book pubshers to increase pres, amazon stock is at a new the month low. fellow booksellebarnes and noble mped as much as 18% after the close on word instor ron burkle wants tincrease his stake fromnder 20% to 37%. that would be the same se stake as theamily that contls barnes and noble. among thosin focus tuesday wi be u.p.s. and its unique read on transportati and

overall busiss conditions. if work isicking up, so could its delivery biness. u.p.s. stock has been underwheing so far this year t it has continued a slow trend higher over thpast 12 months. of crse, the fourth quarter includeshe holiday shipping seas. the stock jump in nuary was when theompany increased its ofit prediction but competit fed ex saw profits fall om a year ago. alsoeporting earning tomorrow, dow chemical and arcr daniels midland. d that's the "market focus". >> susie: 's a super bowl sell out for cbs.

the neork said today it has sold all available comrcial spots for sunday's big gam the super wl is the biggest advertising ent of the year. a 30-second ad sellsor almost to $3 miion, or $100,000 a second. keeping withradition, this year's top advertisers, budwser and bud light beers buying fe minutes of time. general motors and fed ex ar amonthose sitting out this year's gam >> tom: he's what we're watching for torrow. quarterly resus from hershey and news cp. we'll also see auto sales fo jaary. on capol hill, treasury secretary geithner testifi aboupresident obama's 2011 budget bore the senate finance committee. plus forr fed chairman paul volcker talks abt new plans to clamp down on bibanks before the senate bking committee. >> susie: ee really means free at citi. the bank said day it will not charge fees on free ecking accounts at its citink unit.

the move is part of deal reachewith new york's attorney general who said citi didn ve customers enough advance notice before taing on the fees. those chars could have cost cuomers up to $120 a year, and were supposed to kick in tod. >> tom: boston scitific will pay almost $2 billion rival johnson and johnson to sete the patent disputes. the cases involve heart stts. thdeal wasn't a shocker, but e hefty price tag did take some analysts by surpre. boston scientific has no settled 17 lawsuits with&j. today's settlent is part of a plan by boston scientific cut its losses bending its ongoing legal battles.

>> susie: back now to esident obama's $3.8 trillion budg proposal. the president said lawmakers can't resort to the sameld grandstanding en the cameras are on, d the same irresponsiblbudget policies when the cameras are o. mmentator alice rivlin agree she's senior felloat brookings, andormer vice chair of the federal reserve >> the president is creang a budg commission because the unitedtates is facing a debt tsunami and noal political

processes are tobroken to deal with it. the prospect of ngerously escalati public debt predates the recession and e measures tan to mitigate it. an agi population and rising medical spending areushing the cost of dicare, medicaid, and social secity up faster than current taxes can support. commitmentmade over many years byoth republicans and democrats nnot be financed by ever-incasing borrowing. even if we want to pasthese bills on to future taxyers, we willot be able to borrow what we need from the resof the world without raising terest rates to kilr levels and overwhelmingaxpayers with debt service. the seible approach is for both parties to work tether on package of long term rections in spending growth and increases revenue, phased in slowly so it wont derl recovery or danger those already atr near retirement. but current politics isn't

sensible. repuicans wont talk about taxes d democrats wont talk abt entitlement cuts. can the president shame both sides into backing the commison and voting on its remmendations? letsope so, because we can't hide from the debt tsunami mh longer. i'm alice rivlin. >> tom: that's "nightly busiss report" for moay, february 1. m tom hudson, goodnight everyone and goodnig to you to susie. >> susie: see yotomorrow, m. i'm susie gharib. thanks for wating everyone, we hope to see all of you ain tomorrow night. "nightly business rert" is made psible by: thisrogram was made possible by ctributions to your pbs ation from viewers like you.

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